Ontario Auditor General Bonnie Lysyk talks about her report on the costs of cancelling the Oakville gas plant project at the legislature at Queen's Park in Toronto, Tuesday, Oct. 8, 2013. (Frank Gunn/THE CANADIAN PRESS)

Ontario Auditor General Bonnie Lysyk talks about her report on the costs of cancelling the Oakville gas plant project at the legislature at Queen's Park in Toronto, Tuesday, Oct. 8, 2013.(Frank Gunn/THE CANADIAN PRESS)

Ontario could have saved $513-million if cancelled gas plants stayed in GTA: auditor
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Ontario could have saved more than half a billion dollars on the cancellation
of a gas-fired power plant in Oakville if it had built a replacement facility in
the Toronto area, Auditor-General Bonnie Lysyk has told a legislative
committee.

Instead, the government of former premier Dalton McGuinty put the alternative
plant in Napanee, 250 kilometres away – over the objections of the Ontario Power
Authority – which more than doubled the cost of pulling the plug in
Oakville.

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Earlier this week, Ms. Lysyk estimated the cost of killing the Oakville plant
at $675-million to $815-million. Added to the previously revealed total to
cancel a similar plant in Mississauga, Mr. McGuinty’s Liberals will ultimately
spend up to $1.09-billion.

In follow-up testimony at the legislature’s Justice committee on Thursday,
Ms. Lysyk said cancellation costs were much higher than they needed to be.

When the government dropped the Oakville plan, the government promised to
compensate TransCanada Corp., the company slated to build it. The OPA wanted to
do this by giving TransCanada a contract for a smaller plant near Waterloo,
Ont., an area that needed electricity. TransCanada rejected the offer because it
was not as lucrative as the Oakville contract would have been.

The government then told the OPA to give TransCanada a contract for a larger
plant in Napanee, one that would pay the company more than it would have
received had Oakville not been cancelled, Ms. Lysyk said. The OPA did not think
Napanee was the best location for the plant, because the electricity it will
produce must be shipped back to the Toronto area, where it is needed.

Under questioning from Progressive Conservative MPP Vic Fedeli, Ms. Lysyk
added up the additional costs of putting the plant in Napanee, including getting
gas there and sending electricity back. The total came to $513-million.

“The majority of the difference in the cost between the Oakville plant and
the Napanee plant relates to the fact that there’s distance from the southwest
[Greater Toronto Area],” she said.

The plant cancellations were widely seen as a move to save Liberal seats
ahead of the 2011 provincial election.

Estimated cost of gas-plant cancellations, over time

July-October 2012: $230-millionOriginal estimates put the total cost of the gas-plant cancellations at around $230-million. Then-premier Dalton McGuinty pegs the cost of the Oakville cancellation at around $40-million. Chris Bentley, then the energy minister, says the Mississauga gas plant would cost about $180-million.

Early April 2013: $275-millionAs more details emerge, the cost of cancellations continues to rise, with the total cost reaching an estimated $275-million.

April-May 2013: $585-millionThe prevailing estimate for both cancellations hovers around $585-million. This includes $310-million for the Oakville cancellation, as estimated by the Ontario Power Authority. The Mississauga gas plant is pegged at $275-million by then auditor-general James McCarter.

October 2013: $950-millionThe latest estimates put the total cost at around $950-million, according to Auditor-General Bonnie Lysyk. This includes $675-million for the Oakville plant and $275-million for the Mississauga plant.

What's to come: Potentially more than $1-billionThe Auditor-General also warns the total for cancelling the Oakville plant could rise by another $140-million, putting the total over $1-billion.